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Commentary: Providing context for the Biden skinny budget

April 15, 2021
By: Jason Rittenberg

A presidential budget provides, in theory, a strategic vision for the more than $1 trillion in annual, discretionary spending of the federal government. In practice, Congress will pass a spending bill that reflects its own will. The value of the president’s budget is the window it offers into the administration’s priorities. The Biden-Harris Administration’s skinny budget indicates priorities that should excite those working to build regional innovation economies.

As a reminder, the Trump administration’s budgets would have reduced or eliminated many programs — and even some entire agencies — that support tech-based economic development (as well as initiatives in other policy areas). The administration used its budget to make a clear statement about its interest in seeing a much smaller federal government. Congress, of course, was unwilling to pick up these proposals even halfway.

Presidents’ budgets do not pass as proposed — even when Congress is controlled by the same party. The final FY 2022 budget will ultimately be a greater reflection of congressional than presidential will. Presidents can always use influence and political power to push Congress to support specific, high-priority proposals, even to the point of shutting down the government over a budget dispute.

Additionally, some of the new or expanded items in the administration’s budget may pass because they represent newer congressional priorities. Examples include additional spending for health and technology items in the American Rescue Plan Act and funding a new directorate at the National Science Foundation, which is currently proposed by legislation in the House and Senate.

Within the limitations of an annual budget bill, the administration’s proposal suggests significant changes to past federal budgets. The budget proposes increasing the non-defense budget authority by $105 billion, or about 16 percent. According to a report by the Congressional Research Service, this would be the largest such increase in the past decade. Further, the budget would increase defense spending by less than 2 percent and actually hit a lower level than non-defense spending for the first time in at least a decade.

A major factor in the limited changes to the federal budget over the past decade is the Budget Control Act of 2011, which set caps on annual discretionary spending increases until FY 2021. While Congress typically overrode those limits each year, the appropriations committees began each year’s budget process working from an assumption that spending would increase only marginally. FY 2022 does not have any such caps in place, creating a critical question about how much the government will spend this year.

As the president’s full budget is released in May and as it works its way through Congress, we will keep you apprised of the latest developments and what it means.

federal budget, fy22budget